Correlation Between GoldMining and Austin Gold

Can any of the company-specific risk be diversified away by investing in both GoldMining and Austin Gold at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining GoldMining and Austin Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GoldMining and Austin Gold Corp, you can compare the effects of market volatilities on GoldMining and Austin Gold and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in GoldMining with a short position of Austin Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of GoldMining and Austin Gold.

Diversification Opportunities for GoldMining and Austin Gold

-0.27

Correlation Coefficient

GoldMining  Austin Gold

Very good diversification

The 3 months correlation between GoldMining and Austin is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding GoldMining and Austin Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Austin Gold Corp and GoldMining is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on GoldMining are associated (or correlated) with Austin Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Austin Gold Corp has no effect on the direction of GoldMining i.e., GoldMining and Austin Gold go up and down completely randomly.

Pair Corralation between GoldMining and Austin Gold

Given the investment horizon of 90 days GoldMining is expected to generate 49.68 times less return on investment than Austin Gold. But when comparing it to its historical volatility, GoldMining is 3.82 times less risky than Austin Gold. It trades about 0.01 of its potential returns per unit of risk. Austin Gold Corp is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  99.00  in Austin Gold Corp on August 30, 2024 and sell it today you would earn a total of  100.00  from holding Austin Gold Corp or generate 101.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

GoldMining  vs.  Austin Gold Corp

GoldMining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GoldMining has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, GoldMining is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Austin Gold Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Austin Gold Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Austin Gold unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GoldMining and Austin Gold

The main advantage of trading using opposite GoldMining and Austin Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GoldMining position performs unexpectedly, Austin Gold can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Austin Gold will offset losses from the drop in Austin Gold's long position.

The idea behind GoldMining and Austin Gold Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.